In less than a year, cellulosic ethanol startup ZeaChem has raced through preliminary pilot testing in a tiny Silicon Valley pilot plant, and now plans to build a larger facility in Oregon.

Experts consider cellulosic ethanol one of the most promising technologies for helping to reduce global warming, but the technology is still unproven, and there’s a race on to be first to commercial production. The challenge is to make it cost-competitive with oil.

We first mentioned ZeaChem just a few months ago, when the company received an initial $6 million venture investment.

ZeaChem’s patented process is distinct. Whereas most methods seek to reduce cellulosic biomass like wood or grass into either a gas or liquid, ZeaChem does both. It does that by first separating biomass into its constituent parts — cellulose and lignin. The company also uses an organism taken from a termite’s stomach to more efficiently break down the biomass.The upshot is a 50 percent higher yield over competing methods, says Dan Verser, ZeaChem’s vice president of research and development. Getting more fuel out of less material will help the company eventually make ethanol for less than $1 per gallon, if it’s able to scale production up.

First, though, the company’s planned one-and-a-half million gallon per year pilot plant in Oregon will have to prove the concept. So far, ZeaChem has made its ethanol in large batches at its Menlo Park, Calif., laboratory, but at nothing approaching commercial scale.

The plan is to build the pilot plant in stages, in order to work out kinks in the process progressively. In the first stage, the plant will only use sugar as its feedstock, and produce ethyl acetate, an intermediate chemical on the way to making ethanol.

The second stage will switch the feedstock over to wood chips provided by the state’s forestry industry. ZeaChem will then begin making ethanol from the wood. After that, the company will build a commercial plant to produce around 50 million gallons per year.

For the moment, the company is raising funds from a combination of venture capital and debt, in order to begin construction on the pilot plant later this year. It hopes to complete all stages next year, at which point it would be another two years from completion of a full-scale plant.

Among ZeaChem’s many potential competitors, the only one already constructing a commercial-scale cellulosic ethanol plant in the United States is Range Fuels, which broke ground in November for a plant in Soperton, Georgia. Verser is somewhat skeptical of that company’s chances, noting its gasification technique is a “brute force approach that takes massive capital expenditure.”

Other cellulosic ethanol companies, like Coskata, Losonoco and SunEthanol and (coverage here, here and here) have timelines closer to ZeaChem’s. Perhaps the furthest along besides Range is Mascoma, which reportedly planned to break ground late last year for a plant using switchgrass as its feedstock — but it appears to have not yet begun construction.